Prudential suspends sales of its life policies by Wells Fargo

From left: Thomas Schreck, Julie Han Broderick and Darron Smith, ﻿whistle-blowers from Prudential, have filed a wrongful termination suit against the insurer, saying they were fired for drawing attention to Wells Fargo employees signing up bank customers for Prudential without the customers' permission.

Photo: BRYAN ANSELM, STR

Prudential said Monday that it was suspending sales of its life insurance policies through Wells Fargo until Prudential completed an investigation into the bank's sales tactics.

The move comes after a lawsuit was filed claiming Prudential had tried to hush up evidence that Wells Fargo bankers - who were supposed to market the low-cost Prudential policy, MyTerm, to their customers - opened fraudulent accounts in customers' names and had premiums withdrawn from their bank accounts without their consent or knowledge.

Last week, three former Prudential employees filed a whistleblower lawsuit claiming that an internal review at Prudential had found voluminous evidence that Wells Fargo employees took out MyTerm policies for customers without telling them and that many of the victims did not speak English.

The employees had been fired by Prudential - in retaliation, they say, for trying to prod their bosses to act more aggressively on the findings.

Prudential disputes this account; Scot Hoffman, a Prudential spokesman, said the employees were fired "for appropriate and legitimate reasons that were entirely unrelated to Prudential's business with Wells Fargo."

Prudential said Monday that it was preparing a formal statement to address the timing of the announcement that it was suspending sales of MyTerm through Wells Fargo. At least one other bank, BB&T, continues to sell the product.

Prudential would appear to be the first partner company of Wells Fargo to get caught in the fallout from the bank's admission three months ago that thousands of its employees had opened unauthorized accounts in bank customers' names. The bank has fired more than 5,000 employees and paid fines of $185 million in connection with the scandal.

"We stand behind the MyTerm product but have decided to suspend sales of that product through Wells Fargo's retail banking franchise until we have all the facts about whether it is being distributed properly and in the best interest of customers," Steve Pelletier, chief operating officer of Prudential's U.S. businesses, said in a written statement.